6 Steps about Budgeting and Setting Goals for the New Year
At the beginning of December, I always start thinking about sales forecasting for the upcoming year not only for my own business but for my clients as well. Don’t wait till January 1st to set the right goals and determine the right path for you and your business. You can do something about it now! Here’s how in 6 steps:
1. First, set SMART goals, (specific, measurable, attainable, realistic, and timely) for the new year that are feasible. This will help you achieve your desired results. To achieve these goals, you will need a well-defined plan of action.
2. Look at the Big Picture. Get a clear view of your company’s financial picture by forecasting your expected sales and expenses for the upcoming fiscal year. The forecast should include a description of each proposed product or service along with its projected cost. It should also outline other potential sources of income such as fee-for-service work or non-profit donations.
3. Sales Forecasting. Trying to guess how much you’ll sell each month is difficult, so it helps to have some historical data to work with. You can use past sales figures to set your sales goals for the coming year. Sales forecasting also helps you prepare for tax time. The type of business structure you have will determine how you file your taxes, but the next step offers some things to consider when preparing your taxes.
4. Tax Planning. If you’re selling products, you’ll need an itemized list of all your sales to determine how much you owe in sales tax. The same goes for any income tax associated with your business. If you’re selling items online, there are multiple third-party software solutions that can help keep track of your inventory and sales figures for you. We recommend and use QuickBooks to handle your financial and tax information.
5. Planned Expenses. Your 2022 Forecast should specify planned expenses such as personnel salaries and benefits, equipment purchases or lease payments, rent or mortgage payments, other fixed expenses such as insurance, advertising costs and taxes. All these amounts should be expressed in both cash terms and as a percentage of expected gross revenues to help determine if expenses can be covered from operating earnings or if additional funding is required.
6. Finally, get your ducks in order. When it comes time to file taxes at the end of the year, make sure your accountant or bookkeeper has all the information they need from you beforehand. This will help ensure that everything is filed correctly and that they know exactly what information they need from you each step
Now is an ideal time to start budgeting for the upcoming year. Setting goals and keeping the budget in line with your expectations can improve your financial health. Let’s set aside some time to see how our team of experts can help you plan for a successful 2022 (before the new year!).
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